Cabela's 2014 Annual Report Download - page 109

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CABELA’S INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands Except Share and Per Share Amounts)
Litigation and Claims – The Company is party to various legal proceedings arising in the ordinary course
of business. These actions include commercial, intellectual property, employment, regulatory, and product liability
claims. Some of these actions involve complex factual and legal issues and are subject to uncertainties. The
activities of WFB are subject to complex federal and state laws and regulations. WFB’s regulators are authorized
to conduct compliance examinations and impose penalties for violations of these laws and regulations and, in
some cases, to order WFB to pay restitution. For example, the Federal Deposit Insurance Corporation (“FDIC”)
conducted compliance examinations in 2009, 2011, and 2013 and found that certain practices of WFB were
improper. As a result of these compliance examinations, the FDIC issued consent orders and WFB was required
to take corrective action and pay restitution and civil money penalties. WFB has resolved all consent order
requirements and is not currently subject to any consent orders. The Company cannot predict with assurance the
outcome of the actions brought against it. Accordingly, adverse developments, settlements, or resolutions may
occur and have a material effect on the Company’s results of operations for the period in which such development,
settlement, or resolution occurs. However, the Company does not believe that the outcome of any current legal
proceedings would have a material effect on its results of operations, cash flows, or financial position taken as
a whole.
On January 6, 2011, the Company received a Commissioner’s charge from the Chair of the U. S. Equal
Employment Opportunity Commission (“EEOC”) alleging that the Company has discriminated against non-Whites
on the basis of their race and national origin in recruitment and hiring. Although the Company disputes these
allegations, the Company recently entered into preliminary settlement negotiations with the EEOC to resolve this
matter. At the present time, the Company believes that it is probable that it will incur a loss related to the EEOC
matter, but given the early stage of the settlement negotiations, the lack of any specific monetary demand from the
EEOC, and the ongoing nature and complexity of this matter, the Company cannot reasonably estimate any loss or
range of loss that may arise from this matter. Accordingly, the Company has not accrued a liability related to the
EEOC matter. Although the Company does not presently believe that the EEOC matter will have a material adverse
effect on its business, given the inherent uncertainties in this situation, the Company can provide no assurance that
this matter will not be material to its business in the future.
Self-Insurance – The Company is self-insured for health claims and workers’ compensation claims up to a
certain stop loss amount per individual. We recognized a liability for health claims incurred prior to year end but
not yet reported totaling $4,713 and $4,839 at the end of 2014 and 2013, respectively. We also recognized a liability
for workers’ compensation claims incurred prior to year end but not yet reported totaling $3,698 and $5,513 at the
end of 2014 and 2013, respectively. These reserves are included in accrued expenses and other liabilities in the
consolidated balance sheets.
The liabilities for health and workers’ compensation claims incurred but not reported are based upon
internally developed calculations. These estimates are regularly evaluated for adequacy based on the most current
information available, including historical claim payments, expected trends, and industry factors.
18. REGULATORY CAPITAL REQUIREMENTS
WFB is subject to various regulatory capital requirements administered by the Federal Deposit Insurance
Corporation and the Nebraska State Department of Banking and Finance to ensure capital adequacy. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action, WFB must meet specific capital
guidelines that involve quantitative measures of WFB’s assets, liabilities, and certain off-balance sheet items as
calculated under regulatory accounting practices. WFB’s capital amounts and classification are also subject to
qualitative judgment by the regulators with respect to components, risk weightings, and other factors.